International comparison of industrial development in the European context — the problems

Conclusion The index of production enables us to analyse current developments in the countries considered in the cyclical context, the information on real value added that is available for these branches of industry not being sufficiently up to date. In 1999, the division of labour within industry and between industry and the services sector changed, both nationally and in the international context. There was a rise in the nominal and the real ratios of intermediate input. Our conclusion is that, at least in some branches, the structural changes between 1995 and 1999 were of greater importance in Germany than in the other countries. In view of such structural changes the index of production cannot adequately reflect the dynamic of these branches in an international comparison. Different developments in the real ratios of intermediate input and divergent real developments in value added that are evident in the statistics are partly the result of the different methods of price deflation used in the countries and branches considered. The real value added gives a distorted picture of the development in output in these branches in the individual countries. The development in the index of production probably overstates the dynamic of German industry compared with industry in the other countries considered for the period on which this article is based, while understating the trend in value added. It follows from this that the indicators designed to measure output in economic sectors are not enough to give a realistic picture of the trend in output in branches of industry for international comparison. More information, e.g. the trends in employment and investment, also needs to be taken into account.